Existing home sales continued their downward spiral for the eighth consecutive month in October, the AP reported today based on a report from the National Association of Realtors. The 5.1% drop in the median price of a home sold compared to the same time a year ago is the biggest year-over-year price decline on record, according to the AP.
Of course, analysts blame this housing slump on the serious credit crunch, but we all know the housing bubble that burst has a lot to do with it too. Housing was in a bubble and as with all bubbles, prices went up much further than they realistically should have in many areas of the country. People who bought homes at the peak of the bubble are the hardest hit right now because their mortgages probably already are upside down (they owe more than the home is worth) if they bought in one of the hard-hit areas -- California, Florida, Michigan and Nevada. Analysts don't think this housing price drop is over. I've seen predictions of a drop of 10% to 30% in the next five years in some areas of the country. The hardest-hit areas already have seen a 30% drop or worse.
While I keep hearing people talk about subprime borrowers who default on their loans as idiots who should never have bought a home in the first place because they couldn't afford the payments, the reality of the situation is that everyone is being hurt by the subprime mortgage mess, and even prime mortgages are now seeing strain. If something isn't done to make it possible for people to save their homes from foreclosure, prices will only drop even more dramatically as more and more foreclosure homes are sold are fire-sale prices.
No one will be able to sell their homes at what they think is a fair market price until the glut of foreclosures is gone. That glut of foreclosed homes won't disappear until banks stop foreclosing, which by all reports could be a problem until 2010 when the last of the option ARMs re-set.
Let's stop trying to punish those who for whatever reason got in over their heads and instead find solutions to prevent this ongoing surge in foreclosures. The head of the FDIC is calling for mortgage servicers to fix interest rates on loans due to re-set, if the mortgage payments are being made on time, so we won't see even more people end up in foreclosure.
Right now, 80% of the ARMs due to re-set in the next few years are being paid on time. The courts are showing signs of impatience with lenders, and one Ohio judge even denied foreclosures because the loan servicer could not prove it held the notes. That will happen more and more if the loan servicers don't move more quickly to try to help people stay in their homes.
Lita Epstein has written more than 20 books including "The 250 Questions to Ask to Avoid Foreclosure" and "Complete Idiot's Guide to Improving Your Credit Score."











Reader Comments (Page 1 of 1)
11-28-2007 @ 12:04PM
Doris Reichert said...
Brainstorming please join: How to hold on to your home and create extra income with your home.
1. Rent out part of your home
2. Create a "Bed & Breakfast" business by renting out to travelers one room. Advertise on Craigslist and join agencies.
3. Babysitting Children, older people.
11-28-2007 @ 1:01PM
marber said...
The housing market will end when the property is bought up by Europeans, and Asians. They hold most of our currency at this time.
11-28-2007 @ 12:31PM
David Huston said...
Actually, three Ohio Federal Judges have ruled in 73 foreclosure cases that the Plaintiffs have no standing to bring a foreclosure action, since they can't prove that they own the mortgages. This will become a standard defense nationwide.
11-28-2007 @ 12:53PM
Doc said...
Pure Greed. Housing Prices have been ridiculously inflated. Since when can you use your house as a bank ????? I have an acre of land w/a creek behind next to a state preserve 3-9 minutes from a major greatl ake and a large municipal area and major shopping malls - 3 bedrooms, 2 1/2 baths,fireplace, wood burning stove finished basement , 2 car garage - excellent condition - paid 91, 500 prices in the hundreds of thousands around the country for the same type of home - highway robbery - and plain stupidity for paying that amount
11-28-2007 @ 1:51PM
tim said...
location location location 3 most important things in r/e
11-28-2007 @ 1:02PM
marber said...
The home buying will continue until all the property now on the market is bought up by those with the money to do so. That means that we Americans wait until the sale on homes is bought by those who have the money. Europeans and Asians from Europe and Asia. Our money is almost worthless.
11-28-2007 @ 2:13PM
EMIL J KOVACH JR said...
HOW BAD IS IT--In Your Neighborhood?
Search "YAHOO FORECLOSURES"
And Get Link.
And Enter Your Zip Code, Or City Of Anywhere-You Would Like To Check
11-28-2007 @ 2:20PM
mjs0028 said...
Every single real estate correction since the beginning of time has been about 10%. Thats about where we are now. This report is old news and is ancient history now. We all know housing went down in October - it was the worst month to try to sell a home and will not get any worse than that. We will see what happens this spring.
In my opinon this whole credit debacle is blown out of proportion by the negativity hungry media. Citigroup lost 4 billion on faulty mortgages yes, but what the media forgot to tell you is that they also made 30 billion on them.
11-28-2007 @ 2:37PM
George Miller said...
These are very deceptive numbers. Real Estate is not a national, or even a regional market. Real Estate is local.
In the Lower Connecticut River Valley, we are up 27% in houses sold.
So you can't generalize about this stuff.
11-28-2007 @ 2:51PM
Jill Schottenstein said...
To the Good, Bad & Ugly:
Click here: http://www.sec.gov/rules/final/34-52029.pdf
Will someone please explain the delisting process,deregistering and consideration of impact on the economy, burden on competition, and promotion of efficiency," that might become a reality for M/I Homes in the near future. What will the company do with the 19 bank loans and international bonds owed to the American Public?
It should be noted that Robert Plenarski was aware that the "OPERATIONAL AGREEMENT was missing from the NO ACTION LETTER 2-28-03 written from Vorys, Sater, Seymour, and Peas, to the SEC. This document was never found and unfortunately never read, just signed.
Perhaps now a real AUDIT from the GAO is in order documenting the exact amount that each of the 19 banks and international bond holders owe...
M/I HOMES INC
9.98 -0.88 (-8.10%)
Previous Close 10.86 on 11/26/07
Open 11.25 as of 9:30 AM EST
Volume 273,200 on NYSE
Day Low 9.83 as of 2:59 PM EST
"Washington, D.C., Nov. 27, 2007 - The Securities and Exchange Commission announced today that Thomas J. Kim has been named Chief Counsel and an Associate Director of the agency's Division of Corporation Finance."
No Action, Interpretive and/or Exemptive Letter:
M/I Schottenstein Homes, Inc.
February 28, 2003"
RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE "
Re: M/I Schottenstein Homes, Inc.
Incoming letter dated February 20, 2003
This position is based on the representations made to the Division in your letter. Different facts or conditions might require another result.
Sincerely,
/s/ Robert Plesnarski
Robert Plesnarski
Special Counsel"
Incoming Letter
Ronald A. Robins, Jr.
Direct Dial (614) 464-6223
Facsimile (614) 719-4926
E-Mail - rarobins@vssp.com
February 20, 2003"
Office of Chief Counsel"
Division of Corporation Finance
Securities and Exchange Commission
Washington, DC 20549"
The same form of Operating Agreement (the "Operating Agreement") applies to each of the LLC's. A copy of such form of Operating Agreement is attached hereto as Exhibit B.
(missing)
Exhibit A, attached hereto, sets forth the interests ...(missing)
Who is floating/manipulating this stock today?
M/I HOMES INC (MHO)
10.00 +0.02 (+0.20%)
"Click here: FT.com / Companies / Financial services - Fed move fails to avert rout in markets "
"First where did all that money come from? "
"The answer is, of course, leverage on an unprecedented scale. As we have often pointed out, a hedge fund can leverage its capital a staggering 52 times, using property-related derivatives." "
"The second question is, "Who invested in these so-called 'securities?'"
"Remember that the derivatives market now stands at an estimated $440 trillion. That is a number so huge that many people may wonder if it is just “cyber” money. And, they might ask, "Who is behind it all?" Another good question. "
"
'
11-28-2007 @ 4:33PM
budgethome said...
The main problem with the housing market is the bad publicity the media has done. Throughout time there have always been good years in real estate and bad ones. The real estate market is a roller coaster and that is what drives it. In the 1980's the market was horrible, interest rates were about 18% or higher and the prices for the houses were low. In the mid 1990's it started to get year or so.
Stop crying and put some pants on. This is the greatest country in the world and we are allowing the media to destroy our economy. To the banks, start lending money again so you could make money again. Stop scaring the investors with all the garbage the media puts out there and let’s bring the dollar back up. We are in desperate times and we need desperate solutions, however the oil companies are registering record profits. It is ridiculous the housing market is getting 110% of the bad publicity but we are getting ripped off by the oil companies and that gets none.
better, however when 911 happened and the economy of this country was basically stopped, the feds lowered interest rates to records numbers and the housing market which is what drives this economy bloomed, also to record highs, but everyone was making money and the dollar was worth a lot more than it is now. It is embarrassing that the euro is worth 3 time more than the dollar.
At that time every time you picked up a news paper or listen to the news all the positive out put the media was giving was incredible. No one was talking about the millions of dollars the banks were making. However, when it stopped being convenient for the market to be in such a good shape, the media started with the negative publicity and drove all the investors to the oil market. Yes banks are losing millions of dollars, but they have made trillions of dollars in the last 6 years.
I am in the real estate business and every one I speak with always says the same thing: the news said if we buy now we are going to lose everything, the news said if I sell now I will go bankrupt, and so on. The media is a very powerful thing and unfortunately the instructions’ being given to them is to stop the real estate market, the only thing is that they were successful in the stopping of the real estate market. However they did not count of stopping the United States economy. Even the European markets have been affected by the so called housing slump. It actually back fire, now run and do something about it before is too late.
11-28-2007 @ 4:35PM
budgethome said...
The main problem with the housing market is the bad publicity the media has done. Throughout time there have always been good years in real estate and bad ones. The real estate market is a roller coaster and that is what drives it. In the 1980's the market was horrible, interest rates were about 18% or higher and the prices for the houses were low. In the mid 1990's it started to get year or so.
Stop crying and put some pants on. This is the greatest country in the world and we are allowing the media to destroy our economy. To the banks, start lending money again so you could make money again. Stop scaring the investors with all the garbage the media puts out there and let’s bring the dollar back up. We are in desperate times and we need desperate solutions, however the oil companies are registering record profits. It is ridiculous the housing market is getting 110% of the bad publicity but we are getting ripped off by the oil companies and that gets none.
better, however when 911 happened and the economy of this country was basically stopped, the feds lowered interest rates to records numbers and the housing market which is what drives this economy bloomed, also to record highs, but everyone was making money and the dollar was worth a lot more than it is now. It is embarrassing that the euro is worth 3 time more than the dollar.
At that time every time you picked up a news paper or listen to the news all the positive out put the media was giving was incredible. No one was talking about the millions of dollars the banks were making. However, when it stopped being convenient for the market to be in such a good shape, the media started with the negative publicity and drove all the investors to the oil market. Yes banks are losing millions of dollars, but they have made trillions of dollars in the last 6 years.
I am in the real estate business and every one I speak with always says the same thing: the news said if we buy now we are going to lose everything, the news said if I sell now I will go bankrupt, and so on. The media is a very powerful thing and unfortunately the instructions’ being given to them is to stop the real estate market, the only thing is that they were successful in the stopping of the real estate market. However they did not count of stopping the United States economy. Even the European markets have been affected by the so called housing slump. It actually back fire, now run and do something about it before is too late.
11-29-2007 @ 11:03AM
Christiane said...
The media did not create the problem in the housing market. Greed and fraud at many levels did. If we keep the government over-regulators out of the equation, the free market society usually takes care of itself. This does not mean that we should not institute positive reforms to establish rules for parts of the mortgage industry which has been quite lax in the past.
BTW the falling US dollar is directly correlated to the Federal Reserve easing rates. The problem is that easing rates can only work for so long. At some time the devaluation of the greenback really does impact our economy. We are part of a global economy and it is critical that remember that we are not an island.